ECB’s Rehn: ECB strategic review will not seek to alter price stability goal

The European Central Bank’s (ECB) strategic review will not seek to alter the price stability goal, the ECB Governing Council member Olli Rehn said on Friday.

More Comments:

ECB’s strategic review will be conducted throughout this year.

ECB’s existing definition for price stability is problematic for inflation expectations.

ECB’s 2003 definition for price stability can be interpreted to set inflation limit at a maximum 2%.

ECB'S price stability target is not symmetric and can be interpreted to be tighter than other central banks.

One option is to set ECB's price stability target closer to that of other central banks following strategic review.

Considers a flexible and symmetric inflation target to be a good option for ECB to study.

FX Implications:

With a few ECB officials taking the podium in the last hour to speak about the ECB’s strategic review, the shared currency is losing ground vs. the US dollar.

The anxiety around the said strategic review seems to be weighing on the euro, as it ignores upbeat German and Eurozone Flash Manufacturing PMI data.

At the press time, EUR/USD is testing fresh daily low at 1.1041, as the bears look to take out Thursday’s low of 1.1036.


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